Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON-Taxpayers are paying a high price to get their tax refunds back earlier. The cost of quick tax loans jumped almost $100 million last tax season, according to a recent study by Consumer Federation of America and the National Consumer Law Center. Refund Anticipation Loans cost borrowers anywhere between $34.95 and $89.95 in loans fees and another $40 for electronic filing fees for loans that only last about 10 days. The study found that the average refund of $1,980 bears an APR of 222.5%. Refund Anticipation Loan APRs can range from 97.4% to more than 2,000%. Few, if any, credit unions seem to be offering RALs, even at lower costs, according to credit union trade groups. “Quick tax loans cost consumers about $907 million, up almost $100 million from the year before,” CFA Consumer Protection Director Jean Ann Fox stated. “When you add in the $484 million in electronic filing fees and $400 million in other charges, consumers are paying almost $2 billion just to get their own money faster than the IRS sends it.” In 2001, about 12.1 million RALs were taken out, up from about 11 million in 2000. H&R Block alone made 5.2 million RALs in 2002. In addition, the report estimates that Household Bank, the largest RAL lender, generated over $225 million in RAL income in 2002. Working poor consumers who qualify for the Earned Income Tax Credit paid about $1.2 billion for commercial tax preparation, electronic filing, RAL fees and other charges to get immediate access to expected refunds, according to CFA and NCLC. The average EITC taxpayer who uses a commercial tax preparer and gets a RAL pays about $250. Of RAL customers, about 40% receive the EITC, the country’s largest anti-poverty program.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times
Live Chat

Copyright © 2022 ALM Media Properties, LLC. All Rights Reserved.